This Year We Need to Reclaim Our Spending

OK. So we’ve had a week to digest the fact that our spending for 2016 was close to $80,000. What now? Is it good? Bad? OK? Shameful? Appalling? Execrable? Firstly, we are going to follow Your Money Or Your Life’s exhortation that this is a no-blame game. It is what it is, there is no use attributing negative emotions to it (or positive ones, for that matter). It is there for analysis, to learn from, and to act as a catalyst for change. In order to better understand what that level of spending means for us, we are going to do some comparisons.

Many years ago I was taught that when you have an illness or injury, one of the most basic tools of diagnosis is comparison. Think there is something wrong with your left hand? Compare it to your right. Is the size different? Is it swollen? Has it changed colour? Different temperature? Functioning differently? To do this, however, you need to have an idea of what normal is.

via GIPHY

Comparing to Ourselves

Firstly, let’s compare inwardly. Is spending $1,515 a week normal for the ETTs? As this is the first time we’ve tracked spending in over a decade, I can’t really answer that question. To tell the truth, I’m pretty sure that we spent even more in 2015, because the very act of tracking raises awareness and can change behaviour. Prior to 2016, I was buying my lunch, and Mr. ETT was buying breakfast as well as lunch! We all know how those lattes add up (thanks to Martin from Get Fired ASAP for pointing me to that calculator!)

Comparing to the Average

When it comes to spending money, normal relies on so many variables that it probably doesn’t exist. The best I can find instead is to compare our spending to average. The Australian Bureau of Statistics conducts the HILDA (Household, Income and Labour Dynamics in Australia) survey every 6 years.. Unfortunately for us, it is due again in 2016, so all the data is from 2009-2010 – over 6 years old. I’ve done my best to adjust for inflation by using the inflation calculator here. In the graph below, I’ve compared ETT spending with the Sydney averages. I was unable to understand how the report determines earning quintiles, so I decided to use the worst-case situation (top quintile) as a comparative. We earn almost spot-on the average wage according to the Average Weekly Earnings, Australia, May 2016 report from the ABS.

It is obvious in the graph above that we spent more than the Sydney average in all categories. We even outspent the top quintile average in half of the categories! Although it doesn’t feel like we are living the high life, the numbers seem to indicate that we are.

A gif of Edina and Patsy from Absolutely Fabulous pulling multiple bottles of champagne from a fridge.
Champagne, Darling!

Comparing to Real People

Those were 7-8 year old, bland, boring averagised (new word!) statistics.  What about real-life hip young happening peeps? What was their spending in 2016? I turned to the Rockstar Finance forums to get an idea of what real, individual people in individual circumstances are spending. Here’s a table adjusted for currency, housing costs and the number of people in a household. If the ETT spending was less, the cell is green. If it was more, the cell is red. As you can see, green is smattered like the remains of a squiggler on the windscreen of a runabout. Once I take into account housing costs, we spent more than everybody who volunteered their information. Everybody!

Person Spent AUD Spent AUD Housing Not Included Spend AUD per person Spend AUD per person Housing Not Included Food AUD Food per person # People Housing Included?
Amy $81,125 $57,466 $16,225 $11,493 $16,245 $3,249 5 Y
Think Save Retire $72,376 $54,606 $36,188 $27,303 $5,713 $2,857 2 Y
Our Financial Path $72,742 $48,784 $36,371 $24,392 $9,692 $4,846 2 Y
Fiery Millennials $55,502 $37,633 $55,502 $37,633 $6,362 $6,362 1 Y
Mister RIP $82,466 $62,266 $41,233 $31,133 $3,444 $1,722 2 Y
Super Savings Tips $79,340 $57,940 $39,670 $28,970 $9,693 $4,846 2 Y
Miss Mazuma $24,573 $24,573 $2,874 $2,874 1 Y
ETT $78,818 $78,818 $39,409 $39,409 $17,588 $8,794 2 N

Of the other people who contributed, we spent more all-up than TJ, more per person than PattiG, nearly twice as much on food as FinAZ, and nearly twice as much all-together as Luke at Dollarwise, and he has 6 people in his family! We spent just a little less than Physician on Fire, who also doesn’t have housing costs, but there are four people covered by that. Our blogging friends Adventures with Poopsie estimated they spent about the same amount as us, however they have child support payments to pay, along with a brand new mortgage to service.

What Did We Learn About How Our Spending Compares?

We uniformly spent more than all of the Financial Rockstars that responded – often, they had housing costs and more people in the family, and we STILL outspent them. This is a biased sample, because they are people on the path to or interested in FI, so naturally they would have a tendency to spend less. But the adage is to hang out with people you want to emulate. If we are aspiring to financial independence, or to retire even a week early, then we should mimic what others do.

Our spending compared to inflation adjusted Australian averages is also high. We outspent the Sydney total by $9,000 in the selected categories. If I extrapolate, that means our yearly spending would have been more in the region of $61,000, or nearly $17,000 less!

Finally, I recently read a comment by a financial advisor who stated “You might find your retirement age at 60 is a little young if you plan to maintain your high level of expenditure” when describing the spending of another couple with “no housing debt, (and) annual living expenses at 2016 rates of $78,500”.

Where To In 2017?

Consensus seems to be in – we should be able to do a lot better with our spending in 2017.

To be honest, we could drop our spending by $10,000 immediately if Mr. ETT and I gave up our individual pocket-money. Those categories are there for a reason, though. We want to prevent marital discord around spending (especially when historically, we have different attitudes to it). There may be potential to reduce the amount that we give ourselves though, as we are both really saving a lot of it anyway. Just because it is marked as spent in the main budget, doesn’t actually mean it is all gone.

When I was digging into our budget earlier in the year, I set a few goals that I think will help to reduce our spending. Our Goals page collates them if you would like to see our ideas. Today’s discovery should help give us the impetus to begin tackling them in 2017.

We definitely want to spend less on food and alcohol this year. Not only will it save us money, but it must be healthier for us, and there is absolutely no use reaching FI if we are too unfit or unhealthy to do anything.

We are setting the following goal, which I will track and report back on monthly. Accountabilitied! (We just finished watching The Guild again.)

Our 2017 spending (excluding a planned holiday to Japan) will be 10% less than our 2016 spending. That is:

$7,882/year, or $657/month, or $152/week or $22/day less.

The stretch goal is to do this including Japan!

There will be some future posts looking at what exactly we will try to reduce to reach this goal. Have you reduced any of your spending significantly? What did you do? How did you do it and maintain the change?

13 thoughts on “This Year We Need to Reclaim Our Spending

  1. Another great post and some very interesting ways of comparing to others.

    I am in two minds about comparison. On the one hand, it can be a tricky way of doing things as ultimately, everyone’s situation is different and everyone spends on different things. For example if you didn’t know we paid a lot in child support and had a mortgage, then you’d think your spending was fine because you only know what you know. It often works the opposite way. I get bummed out that my savings rate is not as high as the Frugalwoods, but I have no idea how much they earn and therefore if it is mainly their salaries that gives them such a high savings rate.

    On the other hand, I think one of the reasons we read all the FIRE blogs is to gain inspiration and sometimes, to be frank, a kick in the butt about how we’re spending.

    Also be aware that many of the bloggers you’re comparing to do have a lower cost of living, as they live in the USA. Food is incredibly cheap there, and even if you did all your shopping at Aldi (which you should in 2017!!), it would likely still come out higher. Entertainment seems to cost a lot more in Australia as well.

    I think the goal you have set is great. We too are on a saving binge this year (post about it out on Wednesday), so we will have to support each other as we both try to reduce our spending!

    • Definitely need a kick in the butt. At least hanging with the FIRE community, we’re surrounded by people who are not only supportive, but a fountain of ideas when we need help or tips on something.

      I love the Frugalwoods as well, but I know we’ll never be frugal, so their savings rate doesn’t worry me!

  2. Amy says:

    I like to see what others spend because I’m currious but have to remind myself that I should really only try to do better than myself. I like tracking my numbers so that i can compare year to year against ourselves and see how we can improve over the previous year.

    • That’s a really good point Amy, thanks. Now we’ve tracked for a year, and we will continue to do so, it will be a positive to be able to measure against ourselves (being the only accurate measure as AwP indicated above). Thanks for visiting and for your contribution!

  3. PattiG says:

    Very interesting! Thank you for sharing. I think we spend way to much, but that is relative to the imaginary way I think we could live our lives. Not relative to anyone else. We too have vowed to do better this year.

    • “Relative to the imaginary way I think we could live our lives.” Fantastic quote, PattiG! I do have to be careful not to lose sight of reality. I can plan to reach the spending of others, but as AwP mentioned below, it is possible that the cost of living in Sydney is actually greater than some of the US cities! Still, we know we can improve. Good luck, we should all check in on the Rockstar Finance Forums once in a while to see how we are going.

  4. Best of luck with your goals! Tracking is such a powerful tool-now that you know what’s going on, you can decide what you do-and don’t-want to change.

    P.S. I would love to go back to Japan, I’m a bit jealous here! It’s a 15 hour or so flight from us, must be much shorter for you.

    • Apparently it’s about 10 or so hours. Mr. ETT went as a child, and I haven’t been since I was a teenager, so we are both really looking forward to visiting.

      It’s funny – tracking is the easy part. Negotiating and actually taking action on the change – that’s a lot more difficult!

    • Not by much, Mr. RIP, and remember that I had to calculate yours by doubling your 6 monthly spending. Perhaps after a true 12 months you wouldn’t be up there! Also, you took so many opportunities to travel last year. I’d much rather be on top of the spending table because I’d travelled (and still maintained a truly enormous savings rate) than because I just spent the darn money on food and drink.

      • Yeah, second part of 2016 has been a little bit more expensive (Mexico Trip) than the first half 😛

        Anyway, congrats for your numbers and your goals! I can’t wait to read about your Japan trip report, I’ve been there in 2015 for 3 weeks and I loved it. Loved so much I’m kind of counting days until I go there back again!

        If you need help or just want to get some recommendations about Japan tell me 🙂

  5. A bit geeky, and partially off topic, but I love that you’re using Tableau. It’s my favourite tool for visualising numbers. Do you have a private license? I’ve only used it at work, and don’t want to dump my personal numbers into that!

    • No, I am using Tableau Public (free, with less functionality, but everything is public). I seriously considered shelling out for a private licence, but I’m devoting my learning time to basic web dev at the moment. I really want to spend the time learning how to use it properly at some point. I began to learn how to use it at my last job, but had only just started when I left. I don’t really get what I’m doing!

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